As of 2016, obtaining a collateral loan for a vehicle is done by applying for a direct loan, going through the auto dealership for financing or going through a bank or credit union for a title loan, according to Zacks. The best option usually depends on the borrower's credit.
A person often applies for a direct loan in person, and the borrower receives his funds in the form of a check, if he is approved, notes Zacks. Until the direct loan has been paid in full, the lender retains the vehicle's title, to prevent the borrower from selling the vehicle. Title loans are usually the best option for borrowers who have poor credit or don't have steady paying jobs.